Lawsuit: Victory Park Capital Advisors, Others Engaged in Illegal ‘Rent-a-Tribe’ Payday Loan Scheme

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Victory Park Capital Advisors, LLC and six affiliates have been named as defendants in a proposed class action that claims the parties operated an illegal online payday lending scheme while exploiting a Native American tribe’s sovereign immunity. The lawsuit alleges that the defendants conspired with Think Finance, Inc. and its CEO, Kenneth E. Rees, (non-parties to this specific suit) to engage the Chippewa Cree Tribe in a “rent-a-tribe” scheme carried out under the name Plain Green that was designed to prey on individuals struggling financially. According to the complaint, the defendants paid the tribe 4.5 percent of their revenues in exchange for use of the tribe’s name, thereby attempting to shield themselves from federal and state regulations and allowing them to charge illegal interest rates as high as 378 percent.

The suit accuses Victory Park and its affiliates of requiring borrowers to agree to monthly ACH transfers before lending them money, which it says violates federal law but guarantees a lower risk of non-payment by allowing the lenders direct access to borrowers’ bank accounts. The plaintiffs in the case claim they each took out several loans with the defendants and were charged as much as 371.82 and 376.13 percent interest, respectively.

The complaint further notes that the defendants’ involvement in the alleged scheme has come to light during several recent legal proceedings, including a lawsuit filed by the Pennsylvania Attorney General against Think Finance and others.